Aster DM Healthcare buys 25 percent in Ramesh Hospitals

Tuesday, May 31, 2016

Dubai-based Aster DM Healthcare has bought India Venture Advisors' nearly 25% in Vijayawada-headquartered Ramesh Hospitals for about Rs 110 crore, taking its total holding in the multispecialty chain to about a third.

Billionaire Azad Moopen promoted Aster DM, which had raised nearly Rs 1,376 crore ($205 million) from private equity funds for its India growth plan, has also committed to invest about Rs 200 crore in Ramesh Hospitals over 12-18 months to turn it into its majority-owned subsidiary.

In May 2013, Ajay Piramal Group-promoted India Venture Advisors had invested aboutRs50 crore for a nearly 25% stake in Ramesh Hospitals, enabling it an exit now with nearly two times returns. Aster DM, which earlier held 5% in Ramesh Hospitals, now owns nearly 30% in the chain, valuing it at about Rs 370 crore.

While the Ramesh Hospitals' management refused to divulge the investment details and quantum of equity dilutions, a person close to the deal told ET: "Ramesh Hospitals' promoters, led by P Ramesh Babu, are open to divesting a majority stake in favour of Moopen's Aster DM, which has committed nearly Rs 200 crore of equity investment. On pumping in further funds for controlling stake, Ramesh Hospitals will become one of the majority-owned subsidiaries of Aster DM over the next few months."

Ramesh Hospitals runs two multispecialty tertiary healthcare centres in Vijayawada and one in Guntur. In a statement on Monday, Moopen said there was need for world-class healthcare and huge potential in Andhra Pradesh's new capital city Amaravati.

"I find lot of synergies for Aster DM and Ramesh Hospitals and hope that this will be the beginning of a longterm mutually beneficial relationship," Moopen said. When contacted, Ramesh Hospitals' chief financial officer Ravi Kiran Pothineni said they have entered into a strategic association with Aster DM, which is helping them with funding the expansion.

The healthcare service provider is looking at increasing bed capacity to nearly 1,500 in the next three years from 550 now. "We have lined up around Rs 250 crore of investments towards the capacity expansion over the next three years and Aster DM has assured to support us with further equity infusion," Pothineni said.